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Honorable Members of the Hawaii County Council <br /> May 5, 2011 <br /> Page 2 <br /> The lower the interest rate and the greater the revenues, the more can be borrowed <br /> while staying within the prudent debt service limits. The proposed operating budget for <br /> this coming fiscal year includes debt service for short term bond anticipation notes, <br /> which are used to reduce carrying cost and insure that cash will be available for projects <br /> as needed. As budgeted, the resulting total debt service is estimated at 10.7% of the <br /> general expenditures. If all debt that has been authorized by the County Council was <br /> issued, the debt service percentage would be 13.2% of the general expenditures. <br /> What is a Capital Improvement Project? <br /> A project is eligible for funding from the capital budget if it is a major nonrecurring <br /> expenditure, such as: <br /> 1. Land acquisition; <br /> 2. Infrastructure improvement other than buildings that add value to the land or <br /> improves utility (roads, drainage, sewer lines, parking, landscape or similar <br /> construction); <br /> 3. New buildings or structures or additions to buildings, including related <br /> equipment and appurtenances which are integral to the new structure; <br /> 4. Nonrecurring rehabilitation, remodeling or expansion of infrastructure and <br /> buildings; <br /> 5. Planning, feasibility, engineering, or design studies related to capital <br /> improvement projects; <br /> 6. Information and communications technology infrastructure. <br /> Pending vs. New Projects <br /> Approximately 31 of the 76 proposed projects are reappropriations of existing projects <br /> totaling $70,189,000 because appropriations are lapsing and funds will not be <br /> encumbered by June 30, 2011. Generally, appropriations are active for three years <br /> from the effective date of the ordinance appropriating the project. <br /> County of Hawai'i is an Equal Opportunity Provider and Employer. <br />